Wisconsin adds sales tax to Amazon.com shopping cart

A box from Amazon.com is pictured on the porch of a house in Golden, Colorado in this July 23, 2008 file photo.

Reuters/Rick Wilking

WASHINGTON (Reuters) - Wisconsin next month will become the 14th U.S. state to begin collecting sales tax on online purchases through Amazon.com Inc, joining a trend toward squeezing more revenue from e-commerce.

Effective November 1, the Midwestern state said sales tax will be added by Amazon to purchases made by Wisconsin residents because the online retailer is opening a distribution center in Kenosha, giving it a physical presence in the state.

Under the law, that means the state can require Amazon to begin collecting sales tax. In states where Amazon has no physical presence, the company does not generally collect the tax, giving it a pricing edge over bricks-and-mortar merchants.

The new 5-percent "Amazon tax" will add about $30 million a year to state revenue, Wisconsin Department of Revenue spokeswoman Laurel Patrick said on Wednesday. The state collected a total of $4.4 billion in sales taxes in fiscal 2013.

Amazon did not respond to requests for a comment.

The company's website lists 13 states where it is already collecting taxes and turning over the proceeds to state coffers.

The Seattle-based titan of e-tailing has been fighting one-on-one battles with the 50 states for years over sales tax, with the federal government so far failing to intervene effectively.

The United States has no national sales tax and Congress has not moved ahead with proposed legislation that would give all states the power to enforce their sales tax laws on e-tailers.

Under a 1992 Supreme Court decision, retailers without a physical presence in a state do not need to collect and remit taxes in that state on each sale. Consumers are supposed to pay the tax on their own, but very few do.

Amazon supports federal legislation for nationwide state sales tax enforcement, but other online retailers, including eBay Inc and Overstock.com Inc, have fought it.

Fitch Ratings has estimated that states in which Amazon does not collect sales tax are losing out on $11 billion in revenue.

West Virginia this month started collecting tax on Amazon sales; and Virginia did so last month. Other states are fighting in court for the right to collect the tax.

Colorado's 2010 legislation requiring reporting by retailers to the state of sales tax owed from online purchases is being challenged by the Direct Marketing Association, a trade group.

Last month, Amazon and Overstock asked the Supreme Court to hear oral arguments in a dispute over New York's law for sales tax collection from out-of-state retailers. The companies contend the law conflicts with the court's 1992 ruling.

The 13 states in which Amazon is now collecting sales tax include Arizona, California, Georgia, Kansas, Kentucky, New Jersey, New York, North Dakota, Pennsylvania, Texas, Virginia, Washington and West Virginia.